Page 4335 - Week 12 - Tuesday, 13 October 2009
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with 50-plus stores throughout the ACT. Mr Martin concluded that there was potential for the IGA network to expand, particularly at the local level.
The review also noted the dominance of Metcash as a wholesaler in the ACT and recommended that independent stores controlled by Metcash should be restricted. The review recommended that the introduction of an additional independent wholesale supplier would provide competitive benefits for the people of the ACT.
In the ACT, the only real competitive tension at the retail level comes from Aldi and the full-line independent chain Supabarn. Aldi is a substantial fourth force in Australian supermarkets. Aldi operates a restricted selection per category, budget priced and mainly own-label product range. It has 200 stores, including seven in the ACT and one in Queanbeyan.
Aldi argued in its submission to the review that “the Australian market is characterised by the market dominance of the two supermarket chains and significant barriers to entry and expansion”. Aldi in its submission expressed its strong desire to significantly expand its network of stores within the ACT. Aldi, of course, is not a full-line supermarket, stocking only about 800 lines, against the 35,000 average that a full-line supermarket stocks.
In the ACT region, specialty grocery and fresh food retailing other than supermarkets were found by the review to make up a smaller proportion of the total than in all other capital cities except for Darwin. From that perspective, the ACT could be seen to have a less diverse retailing sector than other cities in Australia. There are, of course, signs that that is beginning to change here.
The review concluded that ACT grocery prices are generally in line with equivalent regions. Price surveys by Grocery Choice and the ACT Treasury’s supermarket survey indicate that the two major chains are five to 10 per cent cheaper than the larger independents in the ACT and of course much further ahead of the smaller IGA independents. Aldi, with its more limited range, is the most economic supermarket for a staples basket, at almost 25 per cent less than the two major chains.
The review stressed that the main competition deficiency in terms of choice and diversity is within the full-line supermarket service. It was in that area that the review made a number of recommendations which are worthy of further consideration and, the government believes, implementation.
MR SPEAKER: Ms Burch, a supplementary question?
MS BURCH: Yes, thank you. Minister, what has been the reaction to the report from industry groups and consumer organisations?
MR STANHOPE: It is noteworthy that the ACT is the first jurisdiction in Australia to act in response to the ACCC retail grocery inquiry in 2008, and the response from observers has been overwhelmingly positive. We have had positive commentary from industry, from the business community and from various community organisations, most particularly those representing consumers.
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